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What is Total Cost Of Ownership?

 , October 24, 2015 updated on March 05, 2023
Total cost of ownership is a financial estimate that seeks to determine the full cost of an investment over its lifetime. This may include costs related to financing, insurance, acquisition, operations, maintenance, renewal, decommissioning and environmentally responsible disposal. In some cases it also includes opportunity costs. Estimates of total cost of ownership are typically used to compare business investments or options such as buying versus leasing.
Overview: Total Cost Of Ownership
FunctionFinancial Management
Management Accounting
Cost Benefit Analysis
DefinitionAn estimate of the full cost of an asset over its lifetime or a defined period of time.
ValueIdentifying the full financial impact of a purchase or investment.
Related TechniquesLifecycle Cost Analysis
Net Present Value

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